Sink or Swim in China
Sweeping Market Reforms Create Stark Inequalities Among Workers
By Philip P. Pan
Washington Post Foreign Service
Sunday, March 24, 2002; Page A01
SHANGHAI -- They were equals once, three proud members of the proletariat, heirs to a communist revolution.
There was Ding Zijun, so committed to building a workers' paradise that she wept as a teenager when Shanghai city officials assigned her to the cafeteria instead of the assembly line. Dong Baozhen joined the same plant a few years later, delighted to land a job as a machinist's apprentice. Then came Sheng Guohua, who took his father's place on the shop floor as a quality-control inspector.
For decades, they labored side by side at the Shanghai Tool Factory, one of the largest tool manufacturers in China. The pay was minimal, the work often tedious. But back then, the government promised job security, health care, pensions, housing and schools. Back then, it seemed the "iron rice bowl" of lifetime benefits would last forever.
But it didn't.
When market reforms introduced after Mao Zedong's death finally reached China's bloated state industries in the mid-1990s, tens of millions of workers were laid off and told to fend for themselves. Dong, Sheng and Ding were among them. Middle-aged and unemployed, with children to raise and bills to pay, they wondered how they would survive in China's emerging market economy.
Now, four years after losing their jobs, one is a successful entrepreneur, managing a business that employs nearly 100 workers laid off from Shanghai Tool. Another runs a struggling convenience store and has gone deeply into debt to pay her daughters' college tuition. The third barely scratches out a living, selling old stamps at a flea market one day, stuffing flyers into mailboxes the next.
Their different fates are a reflection of the enormous changes sweeping China as it presses ahead with a painful transition from central planning to a market economy, and continues to lay off 6 million to 7 million state workers each year. The transformation has created stark new inequalities as some workers learn to change and thrive, while others fall behind and feel lost.
Labor protests that flared last week in China's northeastern "rust belt" lay bare the stakes: How these workers adapt to life after the iron rice bowl could help determine the outcome of the Communist Party's attempt to reform the economy while limiting political freedom -- sinking it if they resist and revolt, sustaining it if they find new ways to prosper.
Bitter Sacrifices
Dong Baozhen stood outside her small shop, watching residents from the smoke-stained apartment blocks down the street. One after another, they walked past her, ignoring the rows of fruit and soda on the counter.
"They're going to the new supermarkets," said Dong, 47, wringing her hands nervously. "The prices are lower, and they send shuttle buses to take you there for free. . . . . How can I compete?"
It is a question Dong has been asking ever since Shanghai Tool began laying off workers in 1997. A fidgety woman whose face always seems lined with worry, Dong was convinced she would be among the first let go. At the time, she was assigned cleaning duties in the factory dormitories; health problems had taken her off the factory floor years earlier.
"I knew I wasn't contributing to production. I knew they were going to get rid of me," she said. "So I started thinking of ways to survive."
When the managers called her in, Dong was ready with a proposal. The factory ran a small convenience store in the early 1990s, but closed it because it was not making money. She pleaded with her managers to let her rent the store and give it a try. To her surprise, they agreed.
When the factory ran the shop, it had employed five people, each working an eight-hour shift. Dong intended to cut costs by running the store alone, opening early, closing late and moving into a back room with her family. Every day, she woke at 4 a.m. to buy fresh fruit, which she sold to workers trudging to factories at dawn. Every evening, she stayed open late to sell one more pack of cigarettes. Soon, Dong was making $125 per month, nearly twice her old salary at the factory.
Dong succeeded in part because she stopped relying on the government welfare associated with her factory job much earlier than most workers. In 1985, she had given birth to twin daughters. Because factory salaries were based on China's one-child policy, Dong needed more money and started going to the Shanghai train station every night to sell boiled eggs and newspapers.
"Oh, it was so bitter, standing there in the cold, hour after hour, just to make an extra dollar," Dong recalled. "But we needed the money. I have no skills, but I can't eat bitterness, and I wanted to give my girls a better life."
In particular, Dong wanted them to take music lessons. Growing up, she envied those classmates, children of party officials, who could afford to study piano and other instruments. By saving, borrowing and working hard for extra cash, Dong bought a piano and two yangqin, classical Chinese instruments similar to a harpsichord. After years of private lessons, one daughter enrolled at a prestigious Shanghai music academy last year. The other plans to take the entrance exam this year.
But now, all Dong has worked for is in jeopardy. Her store has been losing money for months. It is not just competition from supermarkets. Many local residents have also been laid off and people are spending less. To make matters worse, her husband lost his job last year, too.
So far, the family has made ends meet by borrowing from friends and relatives. In January, Dong sold one of her daughter's yangqin. But she still owes the factory two months' rent for her store, and she does not know how the family will afford next year's tuition for one daughter, much less two.
Her daughter has already offered to withdraw from school. "We're in so much debt, I'm afraid to add it all up. But I told her no, that it would be such a waste if she quit now," Dong said, wiping away tears. "I don't know what we're going to do."
Dong is ambivalent about the market reforms that have reshaped her life. On the one hand, she is convinced the planned economy was flawed. But she also expresses misgivings about the cruelty of market forces.
One evening, Dong watched intently as two young girls studied hairpins hanging on a rack in her shop. She earns a 25-cent profit for each hairpin she sells, far more than the pennies she makes selling most items. When the girls purchased two hairpins, a smile spread across Dong's anxious face.
"Look at what my life has come to," she said, laughing. "I'm so happy just because I made two kuai [25 cents]."
Survival of the Fittest
It was the crowning glory of her long career at the Shanghai Tool Factory. In May 1998, 30 years after she began as a cook in the cafeteria, the Chinese government named Ding Zijun a "model worker," holding her up for the masses to emulate.
A month later, factory officials called Ding in and told her she and more than 150 employees of the "rear support" department were being laid off. Ding was deputy manager of the department, which was responsible for running the factory cafeteria and providing cleaning and repair services.
"We knew it would happen eventually. All the big enterprises were having trouble, and the factory had been under pressure to reform and cut costs," she said. "But when it finally happened, it still hurt."
Before dismissing her, factory leaders asked Ding to do one more thing: start a company to hire as many of the laid-off workers as possible.
"I was raised by the factory. I was a model worker. So I couldn't say no. It wouldn't have been like me," said Ding, 53, a heavyset woman who speaks with the force of a motivational lecturer. "But I was worried, too. These were my colleagues, my friends, and we had been together for years. They were counting on me. I asked myself, could I find work for all of them? And if I didn't, who would?"
Ding's plan was to spin off her department into an independent company, one that would continue to provide services to Shanghai Tool for a fixed fee but would also work for other firms. Ding took on outside contracts, opened a flower store and a household appliance repair shop and set up a kitchen to produce traditional Shanghai desserts.
For Ding's company to make a profit, though, everyone would have to do more work. Eight workers might be assigned to a shift that a dozen might have handled at Shanghai Tool. It was not an easy transition. As the contracts came in, many of Ding's colleagues complained.
"They said it was too much. Some of them cried. Some of them cursed me and tried to pressure me," Ding said. "But we worked on their thinking. If people didn't do the work, we had to get rid of them, cut their pay or send them home to think about it.
"Eventually, people got used to it," she added. "Why? Because they didn't have a choice. They needed a job."
Under Ding's leadership, the company quickly made a profit. Almost all its workers earn more now than they did at Shanghai Tool. Ding's own salary climbed from $200 to $250 per month.
Being laid off was a blessing for Ding in other ways, too. She had been a strong student in high school, but her plans to enroll in college were interrupted by the Cultural Revolution. As a result, she never felt she was realizing her full potential at Shanghai Tool.
"Losing my job at the factory opened new opportunities for me," Ding said. "Before I just ran a little cafeteria. Now I'm responsible for an entire company."
In other words, the model worker became a model entrepreneur. A Communist Party flag still hangs over her desk, but Ding rattles off products, prices and profit margins with the efficiency of a capitalist manager. Her business card identifies her as chairman of the board.
Ding succeeded in part because she enjoyed the support of factory and city leaders eager to help those laid off, if only to avoid labor unrest. The factory offered Ding's company office space and the use of its kitchen, and the city granted her important tax breaks.
But also critical were Ding's talent, skills and resourcefulness, all of which she believed the planned economy had never fully exploited. Ding supports the market reforms without reservation, convinced they help the strong as well as the weak.
"Some of us could survive better on our own, but we didn't get rid of our weaker colleagues," Ding said. "If you're not lazy, if you work hard, then there are opportunities out there in the new economy. If you have skills, if you are capable, there are even more opportunities."
Still Scraping By
Sitting on his stool in the flea market, Sheng Guohua took a drag on his cigarette, glanced at the stamps and set a price: $3.50. The customer hesitated, then tried to haggle, pressing for a discount of a dime, or even a nickel. But Sheng refused to budge. He knows what he needs to sell each stamp for to make a decent profit. These days, he needs every cent he can get.
More than three years after losing his job at Shanghai Tool, Sheng has yet to find steady work. The factory recently stopped paying him unemployment benefits. And his son needs $300 for the next semester at the vocational school where he is studying chemistry.
"I'll worry about that when the time comes," Sheng said. "I'll try to borrow money from my family, but I won't return it. My son can return it when he graduates. This is basically how I live: If I have money today, I spend it. I eat a little more. If I don't, I eat less."
When the weather is good, Sheng sets up a stand at the flea market and lays out his collection of stamps, colorful pieces from countries he has never seen and never will. He buys them in bulk from a friend, and sells them to collectors who flock to the market on weekends.
On a busy day, Sheng stays as long as five hours. A chain smoker with graying hair and a mischievous sense of humor, Sheng, 51, jokes with his regular customers as they study his stamps through a magnifying glass. After a good weekend, he can bring home as much as $12.
"It's good money, but it's not reliable," Sheng said. "If it rains, I'm out of luck."
So Sheng scrambles for other work. Six or seven times a month, a local marketing firm calls him with an assignment. He picks up a large stack of supermarket flyers. At 4 the next morning, he heads out on his bicycle to a designated neighborhood, stopping at every apartment building, climbing every staircase, leaving a flyer in every mailbox.
"It's exhausting," Sheng said. "They give you as many as 6,000 flyers in one day. And they check your work carefully. If you miss one mailbox, they fine you, sometimes more than you get paid! Of course, you can't complain. If you don't do the job, somebody else will."
Sheng said he used to earn $50 to $60 a month distributing flyers. But because of competition from other laid-off workers, he usually makes less than $40 a month now. Still, if his stamps are selling well, Sheng can scrape together nearly enough to match the $100 monthly wage he made at the factory.
Sheng has struggled to find a stable job because he is a relic of the planned economy, middle-aged, unskilled, with questionable work habits. At the same time, he refuses to take jobs he believes are beneath him or don't pay enough.
"I have to admit, I'm a little lazy," he said, explaining why he abandoned a $60-a-month job as a security guard that the factory had arranged for him. "If I have enough to cover my costs, or if I hit my goal for the day, then I'll call it quits."
Sheng could afford to quit the security job in part because Shanghai Tool allowed him to keep his subsidized apartment. He also was receiving unemployment benefits from the factory amounting to nearly $40 per month. Those payments were supposed to stop after Sheng found work, and after two years at the latest. But in Sheng's case, they continued for three years.
The situation highlights a challenge for the Chinese government as it struggles to build a social safety net: Many laid-off workers are not receiving unemployment benefits while others continue to receive them even though they have found other sources of income.
Sheng has mixed feelings about life after the iron rice bowl. Like many laid-off workers, he is upset by corruption. But for the most part, he said, the market reforms are "a good thing. In the factory, we all had fixed incomes, but it wasn't enough money. Now, anyone with ability can make money."